1. 1 Philippine Public Financial Management (PFM) Program 1 January 2013

2. Outline A.What is PFM? B.Why PFM Reforms? C.PFM Reform Roadmap and Executive Order No. 55 D.Status of PFM Projects 2

3. WHAT IS PFM? 3

4. 4 What is PFM? Public Financial Management (PFM) is a system of rules, procedures and practices for government to manage public finances in the areas of:  budgeting  accounting  auditing  cash management  management of public debt  revenue generation  public reporting on public sector financial operations

5. WHY PFM REFORMS? 5

6. budget not results basedresults lack of funding predictabilityfunding predictability weak oversight of Congress and publicoversight lack of efficient cash managementcash management messy traffic of documentstraffic of documents weak monitoring of contingent liabilitiescontingent liabilities lack of budget credibility PREPARATION EXECUTION ACCOUNTABI LITY PFM Gaps in the Budget Process AUTHORIZATI ON 6

7. 7 This is now… In the long run, the Philippine PFM needs this kind of information system Financial Reporting

8. GAP/WEAKNESS Lack of a common classification system for budgeting, accounting, auditing and cash management STRATEGIES Revise New Government Accounting System (NGAS) Manual and chart of accounts DESIRED RESULTS Consolidated FM reporting requirements based on harmonized classification of all accounts Real-time reports, access to financial data and control of obligations and disbursements for more effective financial control and accountability 8 Harmonize budgetary and accounting classifications and reporting Codify PFM rules and complete PFM Rules Manual for capacity building Identify common reporting requirements of oversight agencies and line departments PFM Gaps and Strategies

9. GAP/WEAKNESS Lack of credibility of the budget STRATEGIES DESIRED RESULTS Avoidance of re-enacted budget, tightening of savings concept, fleshing out of lump sum funds Facilitating development of Government Integrated Financial Management Information System (GIFMIS) CSO engagement in the budget process Budget supports targets in the Plan More efficient, transparent and accountable budget execution Real time reporting on budget utilization by agencies and the Government. Pro-active CSO support for budget transparency 9 Fast track implementation of Public Expenditure Management reforms

10. GAP/WEAKNESS Budget not yet results- based STRATEGIES Strengthen results orientation of Agency Performance Reviews Institutionalize results based budgeting framework through OPIF Budget decisions based more and more on physical and financial performance DESIRED RESULTS 10 Make agency accountability reports performance based; improve costing methodology for outputs Institutionalize Zero Based Budgeting (ZBB)

11. 11 DBM and DBCC to approve allotment and cash release program at start of year and update midyear GAP/WEAKNESS Lack of funding predictability STRATEGIES BTr and DBCC to improve cash management practices Review validity of SAROs and NCAs Study feasibility of using GAA as budget release document and eliminate releases thru SAROs Predictable and streamlined allotment and cash release programs throughout the year to support agency operations based on DOFs reliable revenue forecasting and programming. DESIRED RESULTS

12. GAP/WEAKNESS Weak oversight role of Congress and the public over the budget process STRATEGIES Capacity building for Congress and CSOs Oversight Committees in Congress and the public use DBM and COA reports more extensively DESIRED RESULTS 12

13. 13 GAP/WEAKNESS Lack of efficient cash management STRATEGIES Improve Treasury Cash Management operations Complete inventory of agency bank accounts and rationalize their number Shift to transaction-based fees for government banking arrangement Improved Cash Programming by BTr and DBM Predictable and stable revenue inflows and cash disbursements DESIRED RESULTS

14. Compel agencies to disclose their contingent liabilities 14 GAP/WEAKNESS Lack of accurate database on contingent liability STRATEGIES Make DOF the authority on issuance of policy on contingent liabilities (for GOCCs and NGAs) Monitor and report regularly contingent liabilities Develop database on contingent liabilities DESIRED RESULTS Improved system for capturing and reporting all liabilities of government entities; real and contingent National Government able to manage all its financial exposure

15. PFM REFORM ROADMAP (2011-2015) AND E.O. 55 15

16. Tagaytay 1 (May 2009) Getting Together Tagaytay 3 (Jan 2011) Strategizing (Setting directions) PFM Reform Program 16 Tagaytay 4 (Aug, 2011) Action Planning (Moving Forward) Tagaytay 4 (Aug, 2011) Action Planning (Moving Forward) Tagaytay 2 (Feb 2010) Reaching an Agreement Tagaytay 2 (Feb 2010) Reaching an Agreement 14 September 2012

17. PFM reforms support Aquino Administration priorities Good Governance PFM Goal Societal Goal 5 Priority Areas Sector Goal Fiscal Discipline Inclusive Growth and Poverty Reduction “Kung walang corrupt, walang mahirap” Anti- corruption/ Transparent, Accountable & Participatory Governance Poverty Reduction & Empower ment of the Poor Rapid, Equitable & Sustained Economic Growth Just, Inclusive & Lasting Peace & the Rule of Law Integrity of the Environment/ Climate Change Mitigation & Adaptation Improve efficiency, accountability and transparency of public fund use to ensure direct, immediate and substantial delivery of public services especially to the poor

18. PFM Governance Structure 18 PRINCIPALS (COA Chair, DBM and DOF Secretary) PFM COMMITTEE PROJECT MANAGEMENT OFFICE PIU GIFMIS DEVT PROJECT PIU BUDGET REPORTING & PERFORMANCE STANDARDS PROJECT PIU IMPROVEMENT OF TREASURY CASH MANAGEMENT PROJECT PIU LIABILITY MANAGEMENT PROJECT PIU CAPACITY BUILDING PROJECT PIU ACCOUNTING AND AUDITING REFORMS PROJECT

19. Funding Support 19 GOP P978.5 (2012 Budget eGov Fund) GOP P978.5 (2012 Budget eGov Fund) AusAID A$30M (P1.2B) Facility Grant AusAID A$30M (P1.2B) Facility Grant WB-IDF Intl Devt Fund WB-IDF Intl Devt Fund EU LGU PFM EU LGU PFM ADB

20. Initial PFM Projects 20 ProjectLead Agency 1.Improvement of Treasury Cash Management Operations BTr 2. Budget Reporting and Performance Standards DBM 3. GIFMIS DevelopmentDBM, DoF/BTr, COA 4. Liability ManagementDoF 5. Capacity BuildingDBM, DoF/BTr, COA 6. Accounting and Auditing ReformsCOA

21. STATUS OF REFORM PROJECTS 21

22. GIFMIS Development Project Objective Facilitate the physical development of a GIFMIS solution that can collect and organize financial information in a central database GIFMIS is an integrated web-based application to enable agencies to generate real-time, reliable and accurate financial reports Ongoing Key Activities and Outputs Development of the National Payroll System (NPS) and payroll- related Government Human Resource Information System (GHRIS) Conceptual Design of GIFMIS Online Submission of Budget Proposal System Enhancement of the eBudget Preparation Management System 22

23. GHRIS & National Payroll System (NPS) The GHRIS and NPS is an internet based system that will facilitate and automate all the human resource management functions of the National Government including a centralized database for payroll management.

24. Improvement of Treasury Cash Management Operations Project Objectives Increase operational efficiency of implementing agencies while minimizing cost of treasury operations Develop a system of cash management that can keep daily cash balances of government at appropriate levels Set up a Treasury Single Account (TSA) by 2014 Ongoing Key Activities Inventory of bank accounts TSA Conceptual Design 24

25. Budget Reporting and Performance Standards Project Objectives Harmonize and consolidate data structures and apply consistent set of budget and accounting rules for reporting Generate real-time reports on budget utilization and financial performance through GIFMIS (long term) Consolidated and agency level budget execution and budget utilization reports published in COA and DBM websites Ongoing Key Activities Formulation of Unified Account Code Structure by Dec 2012 Harmonized budgetary classifications and chart of accounts Harmonized DBM and COA financial reporting forms Formulation of performance standards initially with restructuring of programs/activities/projects (NBC 532) and issuance of OPIF Reference Guide Glossary of PFM Terminologies 25

26. Liability Management Project Objective to put in place a system for managing government's exposure to contingent and other liabilities Ongoing Key Activities GOCC Debt Reporting IFG Debt Management – development of system for national government debt and debt indicators Establishment of database system for contingent liabilities arising from PPP and other NG guarantees 26

27. Objective to continue enhancement of government accounting systems & strengthen external audit capacity Ongoing Key Activities Harmonized Philippine Public Sector Accounting Standards (PPSAS) with international standards (IFRS and IPSAS) Enhancement of NGAS Revised Chart of Accounts Developed Philippine Public Sector Standards on Auditing (PPSSA) Information Technology/Systems Audit –Development of a web-based Integrated Results and Risk- Based Audit Software (IRRBAS), a tool for IT/IS Audit Accounting and Auditing Reforms Project 27

28. Capacity Building Project Objective develop skills of PFM workforce on PFM competencies and on reengineered business processes and/or applications build broad stakeholder support for the reforms –personnel of the oversight and implementing agencies –legislators –civil society organizations Ongoing Activities Training on Internal audit for all agencies Change management readiness surveys and workshops and various awareness and communication activities Training on the use of the Unified Account Code Structure and Online submission of budget proposal Development of PFM Competency Framework to professionalize PFM workforce 28

29. Change Readiness Survey 645 respondents: Managers (264) and Technical Staff (381). Strong agreement among managers and staff on survey items. 29 GIFMIS will improve transparency and accountability in their agencies

30. Change Readiness Survey Majority feel that senior executives and managers are personally committed to the GIFMIS project. Notably, about 20% of the respondents are undecided responding “Neither Agree or Disagree” 30

31. PFM Learning and Development Training Needs Assessment Awareness Briefings and Consultations (Government, CSO and Public Stakeholders) INPUTS LEARNING AND DEVELOPMENT PROCESSES (by Group, by System) World’s Best Practices Reengineered Business Processes GIFMIS Systems Functional Users Training Reengineered Business Processes GIFMIS Systems Technical Users Training (IT/network Admin Staff) Reengineered Business Processes GIFMIS System Professional Development Courses Productivity Tools, Financial Analysis, Values Reorientation, Ethics and Accountability Professional Development Courses leading to certification, diploma or master’s degree in PFM Informed and educated PFM executives, managers, employees, public, CSO stakeholders, etc. Competent PFM workforce in budgeting accounting, internal audit, treasury management, govt IT audit, etc. Transparent and accountable PFM systems, etc. DESIRED OUTPUT/OUTCOMES Monitoring and Evaluation

32. 32 BUCKET LIST GIFMIS System NPS/GHRIS Prototype & System Project Teams TSA M&E Communications/ Change Mgt. Communications/ Change Mgt. Budget Classification & Unified Account Code Structure Learning, Education and Development Budget Execution Module Budget Preparation Module Liability Management Phil Public Sector Standards on Auditing Phil Public Sector Accounting Standards

33. Critical Path to GIFMIS Political Leadership Executive Order 55 Institutional Structures and Plans PFM Roadmap PFM Governance Program Management Office Change Management Capacity Building Communication Policy Decisions GIFMIS concept Business process changes Functional assignments Development Functional Design System design Procurement Business Changes Harmonized accounts Treasury Single Account Centralized payments GIFMIS Management/Organizational Policies, Processes, Systems People/ResourcesFinances/Budget

34. Top Three Actions in 2013 1.Developing the GIFMIS – Implementing the prerequisites such as Unified Account Code Structure (UACS), functional requirements gathering 2.Implementing the Treasury Single Account – Agreement among major stakeholders – DOF, Central Bank and government servicing banks 3. Professionalizing the PFM workforce – Development of PFM Competency Framework as basis for competency based training for PFM professionals

35. PFM Reform Roadmap Leading the way to the right path 35 Improved efficiency, accountability and transparency of public fund use Direct Immediate Substantial The Filipino People especially the poor Improved Public Service Beneficiary

36. ‘…it is incumbent on all of us to confidently assert that governments that do things right should have no problem keeping our fellow citizens informed and engaged, and are thus, partners of government in its fundamental task of addressing the needs of the people. The result is an empowered citizenry, which is the essential aspiration at the heart of the digital revolution sweeping the globe...’ President Benigno S. Aquino III Speech at "The Power of Open: A Global Discussion" Google New York, 75th Ave., New York 19 September 2011

37. 37 Thank You www.pfm.gov.ph